Friday’s trade (in GMT terms) saw GBP/USD within the range of 1.2903-1.3036. The pair closed at 1.2915, losing 0.32% compared to Thursdays close. It has been the 172nd drop in the past 315 trading days and also a second consecutive one. The daily low has been the lowest level since July 11th, when a low of 1.2851 was registered. In weekly terms, GBP/USD lost 1.19% of its value during the past week. It has been the 17th drop in the past 32 weeks and also a second consecutive one. The major pair has increased its decline to 2.41% so far during the current month, after losing 0.59% of its value in July.
At 6:40 GMT today GBP/USD was edging up 0.16% on the day to trade at 1.2936. The pair touched a daily high at 1.2942 during the mid phase of the Asian trading session, overshooting the daily R2 level, and a daily low at 1.2900 during early Asian trade.
On Monday GBP/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United States
NY Empire State Manufacturing Index
The New York Empire State Manufacturing Index probably increased to a reading of 2.00 in August, according to the median forecast by experts, from 0.55 in the prior month. If so, this would be the third straight month, when the gauge inhabited positive territory.
In July, the gauges for new orders (-1.82 down from 10.9 in the preceding month) and shipments (0.7 down from 9.32 in the prior month) dropped, the sub-index for inventories stood into negative territory (-8.8, up from -15.31 in June), while the sub-index for labor market conditions fell below the key 0.00 level, reaching -4.4. Respondents in the survey were less optimistic in regard to the six-month outlook, while their capital spending plans remained without change.
Index readings above 0.00 are indicative of improving business conditions in the region. Higher-than-anticipated index values will usually have a moderate bullish effect on the US dollar. The Federal Reserve Bank of New York is expected to release the official reading at 12:30 GMT.
NAHB Housing Market Index
The National Association of Home Builders (NAHB) Housing Market Index probably advanced to a reading of 60.0 in August, according to market expectations, from 59.0 in July. If so, August would be the 26th consecutive month, when the gauge stood in the area above 50.0. In July, the sub-index of sales expectations dropped to a level of 66.0 from 69.0 in the prior month, the gauge of buyer traffic slipped to 45.0 from 46.0 in June, while the gauge of current sales conditions ticked down to 63.0 from 64.0 in June.
The indicator is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide a moderate support to the US dollar. The official report is scheduled for release at 14:00 GMT.
Correlation with other Majors
Taking into account the business week ended on August 12th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:
GBP/USD to USD/CAD (0.9393, or very strong)
GBP/USD to USD/CHF (0.7017, or strong)
GBP/USD to USD/JPY (0.5860, or strong)
GBP/USD to AUD/USD (0.0761, or very weak)
GBP/USD to EUR/USD (-0.5617, or strong)
GBP/USD to NZD/USD (-0.6690, or strong)
1. During the examined period GBP/USD moved strongly in one and the same direction with USD/JPY and USD/CHF, while moving strongly in the opposite direction compared to EUR/USD and NZD/USD.
2. GBP/USD moved almost equally in one and the same direction with USD/CAD during the past week.
3. GBP/USD moved almost independently compared to AUD/USD during the period in question.
Bond Yield Spread
The yield on UK 2-year government bonds went as high as 0.182% on August 12th, or the highest level since August 4th (0.211%), after which it closed at 0.141% to lose 0.003 percentage point compared to August 11th.
Meanwhile, the yield on US 2-year government bonds climbed as high as 0.750% on August 12th, after which it fell to 0.706% at the close to lose 4 basis points (0.04 percentage point) compared to August 11th.
The spread between 2-year US and 2-year UK bond yields, which reflects the flow of funds in a short term, narrowed to 0.565% on August 12th from 0.602% on August 11th. The August 12th yield spread has been the lowest one since August 4th, when the difference was 0.535%.
Daily, Weekly and Monthly Pivot Levels
By employing the Camarilla calculation method, the daily levels of importance for GBP/USD are presented as follows:
R1 – 1.2927
R2 – 1.2939
R3 (Range Resistance – Sell) – 1.2952
R4 (Long Breakout) – 1.2988
R5 (Breakout Target 1) – 1.3031
R6 (Breakout Target 2) – 1.3048
S1 – 1.2903
S2 – 1.2891
S3 (Range Support – Buy) – 1.2878
S4 (Short Breakout) – 1.2842
S5 (Breakout Target 1) – 1.2799
S6 (Breakout Target 2) – 1.2782
By using the traditional method of calculation, the weekly levels of importance for GBP/USD are presented as follows:
Central Pivot Point – 1.2972
R1 – 1.3041
R2 – 1.3167
R3 – 1.3236
R4 – 1.3305
S1 – 1.2846
S2 – 1.2777
S3 – 1.2651
S4 – 1.2525
In monthly terms, for GBP/USD we have the following pivots:
Central Pivot Point – 1.3171
R1 – 1.3546
R2 – 1.3858
R3 – 1.4233
R4 – 1.4608
S1 – 1.2859
S2 – 1.2484
S3 – 1.2172
S4 – 1.1860
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
